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A Confession

 

When Lex Duco was still a young company, we struggled so hard to maintain a positive cash flow like any other company in the early stages. Since we were in construction, it was even difficult as we have to face many unexpected project costs time to time as a nature of the industry.

Then we decided to take two important actions to control this problem and one of in which we experienced a collateral damage. The two actions were
1. To use company assets efficiently as required and when required only.
2. Minimize unnecessary project costs.
The inevitable collateral damage was with the action one.
As a measure to utilize company assets efficiently, one of the most important actions we have taken was to use the time of our professional staff only on productive projects, where we categorized clients in to 5 groups.

A. Clients with strong desire to start construction and will start in less than 3 months.
B. Clients with strong desire to start construction and will start in less than 6 months.
C. Clients with low desire to start construction and may start in less than 3 months.
D. Clients with low desire to start construction and may start in less than 6 months.
E. Clients with no desire to start construction soon

Then we prioritized category A & B and provided them a super fast service while providing a slow service to the other 3 categories, where the lowest priority was set to category E.
As a result, A and B clients were very happy and started construction soon. They are still with us within our 12 months Defect Liability Period and 20 Years Structural Warranty Period.
The strategy was highly successful and it lifted the company to the level where we are today; the only design and build firm in the country that serves over 240 bellow 100 million clients with state of the art technologies such as “Design to Cost”, “Triple Quality Check”, “Quality Ensuring System”, “Quality Audit” and Lump Sum Fixed Price”.

But the C,D and E clients; that is where we experienced the collateral damage. They were not happy and about 50% of them wanted refunds. At early stages, we were unable to approve refunds just to make the clients happy while absorbing all the costs incurred. But as a company that operated and still operates in ethical and moral grounds, we always paid out refunds after deducting our costs as earlier agreed. Then again about another 50% of refunded clients were not happy about the refunds they have received and as a result we have over 100 ex-clients, who are still unhappy with the company.

Even today as the leading company in the market, we still use the above categorization but now we treat C,D and E clients differently compared to the past. We still do not provide them with a super fast service as they actually do not need such a service, (as they do not desire to start construction soon), yet, we serve them with the same service quality! Thereby, now we have reduced the number of unhappy clients dramatically.

So at this stage, do we have unhappy clients?
As far as construction quality is concerned, NO, we are maintaining 99% quality satisfaction with the aid of “Triple Quality Check”, “Quality Ensuring System” and “Quality Audit” that includes the free service of two Chartered Engineers as a part of this system.

As far as above categorization is concerned, yes, at categories C,D and E, there are few, who wanted refunds and not happy with what they have received. But this number is much more lower compared to the history as now we payout refunds while absorbing as much incurred costs to us as possible as a client service measure. But some people are still not happy.

As far as construction speed is concerned, yes, there are more than few unhappy clients. In a country like Sri Lanka, where we have to get the job done by average workers, at this point we cannot fully solve this problem. But with some of the recent advancements of our systems in Labour Management, we are experiencing very impressive results now and after 6 months, we are expecting less than 4% client complaint about construction delays. This system is now implemented in 40% of our sites and by the end of this April, we are planning to make it 100% whereby this delay problem will be solved by at least 96%.
In order to achieve this goal, we had to think completely out of the box and invent a new Labor Management procurement coupled with a technical staff management method that we call “Score Residence Method” which will be explained in a separate article.

As far as cost is concerned, yes a few. The rates of our signed agreement are fixed and therefore we do not experience unhappy clients with regard to the agreed rates. But the cost of some items that we have not included in the agreement might change later and in such situations we experience unhappy clients. We expect our clients to understand the nature of excluded items and the fact that they should anticipate changes. Also, we would like our clients to understand that even if we have made an error here, if that is the case, it is a mere estimation error, but not charged or taxed clients unnecessarily.

In summary, we still experience about 10% unhappy clients within our ongoing projects and out of 240, it is about 24 clients (actual number is 17 as at the report today and it fluctuates). This is in addition to old ex-clients and therefore we consider it as too much.
But as a rapidly evolving leading company in the market who rely on systems and procedures to overcome problems (probably the only design and build company that believes and develops systems), we are working on above plans to minimize this number while serving the nation for many more years.

Thank you
Lex Duco